A new spark

Mahindra & Mahindra launched the country's first all-electric four-seat car, which it called the e2o. Those who have test-driven the car say there is a total lack of engine noise - as the car runs on a lithium ion battery - which can at times be unnerving. The turning radius is short, the ride quality is decent, and the pick-up is not bad. But if you want to do corners at high speed, you could lose traction or upset the dynamics of the car. But this is a minor glitch. As a technology, it's environment friendly. And it's inexpensive to run. The cost of driving the car is just 50 paisa per km, which is significantly lower than petrol cars (Rs 4.56 per km), diesel cars (Rs 2.7 per km) and even CNG cars (Rs 2.12 per km). So, an electric vehicle is the way to go.

The problem is the price. At Rs 5.96 lakh (on-road price in New Delhi), the e2o isn't really cheap. For this price, buyers have the option to pick from a whole range of hatchbacks and even some compact sedans. This in spite of the concessions provided by the state government: 15 per cent subsidy on the price of the vehicle, refund of 12.5 per cent VAT and road tax of only 2 per cent (for all other cars, buyers need to pay 4 per cent). At the moment, Delhi, Karnataka (it has cut VAT from 14 per cent to 5 per cent) and Maharashtra (it has decided not to impose road tax which is 9 per cent for petrol cars and 11 per cent for diesel cars) are the only states in the country that provide incentives for electric vehicles. As a result, the e2o is substantially more expensive in markets like Chandigarh, Hyderabad, Kochi and Ahmedabad.

The market for electric cars in Europe and China is sustained by government subsidies. In 2010, the Union ministry of new and renewable energy had announced a subsidy of 20 per cent on the ex-factory price of electric vehicles; that scheme expired on March 31, 2012. Car makers have said that unless the government subsidises electric cars, the market will remain small. And so long as the market is small, car makers can't scale up production to get the economies of scale. Prices, therefore, won't come down in a hurry. It is worth noting that General Motors was working on an all-electric version of its Spark hatchback but shelved the plan. Nissan too had plans to launch the Leaf, its electric car, in India but gave up the plans because of unfavourable market conditions.

The other challenge is the range. The e2o can run up to 100 km on a single charge of five hours. In addition, there is the "limp-home" mode that runs the car 10 km extra and a "revive" function for additional 10 km. The car doesn't lose range while idling at traffic signals and buyers have the option to fit the "Sun2Car" system to draw solar energy. Still, the range rules out people using the car for long drives. More worryingly, the Indian ecosystem doesn't really support electric vehicles. Most Indians in cities park their cars in the open, outside their homes, with no access to electricity plug points. A tiny fraction of Indian homes has garages where the electric car can be left overnight for a full charge. Unless the parking infrastructure improves, the market for electric cars will remain small.